By: Charles Webb
Which of these subjects are Americans least likely to want to talk about? Based on several surveys, including ones from Northwestern Mu
tual Life, Wells Fargo and T Rowe Price Group, the subject of money is the least desirable topic that Americans feel comfortable discussing with friends or family.
tual Life, Wells Fargo and T Rowe Price Group, the subject of money is the least desirable topic that Americans feel comfortable discussing with friends or family.
The subject of money is a funny thing. After all, money is the one thing that we can pretty much all agree on - more is better, we're all working hard to acquire it and it buys us the things we like to show off to others. However, when it comes to openly talking about it, taboo is the word. We frown at others who talk about money in polite company, we keep our wealth a secret from our children, and we hide the truth (either better or worse) from our peers.
It's not that money isn't on a lot of minds. Those surveyed by Northwestern Mutual rated personal finance a top priority (second only to personal health), and the majority felt their financial planning could use improvement. Yet according to the survey, 42% have never spoken to anyone about their retirement and only 39% have spoken to their spouse or partner about the subject.
In our business, we see this phenomenon in many ways almost every day. On one end of the spectrum, you have very wealthy people who are worried that they'll be a target for others. On the other end are people who may feel ashamed of their situation. Then there are the countless situations in between.
While it's generally a good idea to keep your cards close to the vest as the saying goes, when it comes to your family, it is a good idea to be more open about things. This is especially true with adult children and aging adults.
From the adult child's perspective, understanding the parent's financial situation can alleviate uncertainty as to whether the parents will need support from their children in the future. Without planning, the burden of supporting one's parents can lead to significant marriage problems for the benefactor and resentment among siblings. Proper planning ahead of time can give all those involved time to discuss how the giving will take place and what the tradeoffs might be. For example, one sibling may contribute financial resources and another may provide personal resources such as directly caring for an ailing parent.
From the parent's perspective, early conversations are always helpful when it comes to estate planning. However, few parents want to dwell on their mortality-a subject that may also make the children uncomfortable. Parents may also dread sparking family squabbles about who's getting what, or worry that once the children know what's coming to them they'll become entitled, unmotivated heirs. But the benefits of getting everything out in the open can be enormous, both emotionally and financially.
Telling children ahead of time what to expect allows parents to explain their decisions and it allows the children to plan their lives accordingly. Plus, feedback from the children can be an eye opener, prompting parents to make wiser decisions about their wills, and there may even be a tax benefit in some cases.
When it comes to multiple children, there is plenty of room for resentment among heirs over the terms of a will. Those resentments can last their lifetimes, too. But talking things out while the parents are alive may help soothe hurt feelings. Parents can use this opportunity to explain things in their own words instead of the cold legal language of a last will and testament.
Parents may choose to speak with each child individually or in a group, depending on family dynamics. Sometimes the individual approach makes it easier to discuss potentially sensitive issues such as unequal distributions, the use of trusts versus passing on wealth outright, or selecting one child over another for a fiduciary role.
Another huge benefit is to inform the children what they'll be dealing with. This can range from who the executor is to where all the accounts are located. That last thing a grieving family should have to deal with is hunting tax returns and bank statements trying to figure out where their parents held all of their accounts. The business of death should be minimized to the fullest extent.
Lastly, the children may actually have a better idea as to how the estate should be divided. Parents often think they understand the family dynamic but could be completely wrong when it comes to adult children. If the kids can agree among themselves ahead of time, those changes can be easily implemented while the parents are still alive.
The bottom line is that money conversations are an important part of maintaining healthy family relationships. All too often these conversations are overlooked or just avoided. While the benefits are obvious for the wealthy, it's also important for those of more modest means, too. Choosing when the kids are mature enough or responsible enough may be a challenge, but the subject eventually needs to come up.
In our business, we see this phenomenon in many ways almost every day. On one end of the spectrum, you have very wealthy people who are worried that they'll be a target for others. On the other end are people who may feel ashamed of their situation. Then there are the countless situations in between.
While it's generally a good idea to keep your cards close to the vest as the saying goes, when it comes to your family, it is a good idea to be more open about things. This is especially true with adult children and aging adults.
From the adult child's perspective, understanding the parent's financial situation can alleviate uncertainty as to whether the parents will need support from their children in the future. Without planning, the burden of supporting one's parents can lead to significant marriage problems for the benefactor and resentment among siblings. Proper planning ahead of time can give all those involved time to discuss how the giving will take place and what the tradeoffs might be. For example, one sibling may contribute financial resources and another may provide personal resources such as directly caring for an ailing parent.
From the parent's perspective, early conversations are always helpful when it comes to estate planning. However, few parents want to dwell on their mortality-a subject that may also make the children uncomfortable. Parents may also dread sparking family squabbles about who's getting what, or worry that once the children know what's coming to them they'll become entitled, unmotivated heirs. But the benefits of getting everything out in the open can be enormous, both emotionally and financially.
Telling children ahead of time what to expect allows parents to explain their decisions and it allows the children to plan their lives accordingly. Plus, feedback from the children can be an eye opener, prompting parents to make wiser decisions about their wills, and there may even be a tax benefit in some cases.
When it comes to multiple children, there is plenty of room for resentment among heirs over the terms of a will. Those resentments can last their lifetimes, too. But talking things out while the parents are alive may help soothe hurt feelings. Parents can use this opportunity to explain things in their own words instead of the cold legal language of a last will and testament.
Parents may choose to speak with each child individually or in a group, depending on family dynamics. Sometimes the individual approach makes it easier to discuss potentially sensitive issues such as unequal distributions, the use of trusts versus passing on wealth outright, or selecting one child over another for a fiduciary role.
Another huge benefit is to inform the children what they'll be dealing with. This can range from who the executor is to where all the accounts are located. That last thing a grieving family should have to deal with is hunting tax returns and bank statements trying to figure out where their parents held all of their accounts. The business of death should be minimized to the fullest extent.
Lastly, the children may actually have a better idea as to how the estate should be divided. Parents often think they understand the family dynamic but could be completely wrong when it comes to adult children. If the kids can agree among themselves ahead of time, those changes can be easily implemented while the parents are still alive.
The bottom line is that money conversations are an important part of maintaining healthy family relationships. All too often these conversations are overlooked or just avoided. While the benefits are obvious for the wealthy, it's also important for those of more modest means, too. Choosing when the kids are mature enough or responsible enough may be a challenge, but the subject eventually needs to come up.
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